Title
Feedback dynamic control for exiting a debt-induced spiral in a deterministic keen model
Date Issued
09 February 2024
Access level
open access
Resource Type
journal article
Author(s)
Editor(s)
Muhammad Aqeel
Publisher(s)
Public Library of Science
Abstract
The Keen model is designed to represent an economy as a dynamic system governed by the interactions between private debt, wage share, and employment rate. When certain conditions are met, the model can lead to a debt spiral, which accurately mimics the impact of a financial crisis on an economy. This manuscript presents a recipe for breaking this spiral by expressing Keen’s model as an affine nonlinear system that can be modified through policy interventions. We begin by considering critical initial conditions that resemble a financial crisis to achieve this goal. We then locate a desired point within the system’s vector field that leads to a desirable equilibrium and design a path towards it. This path is later followed using one-step-ahead optimal control. We illustrate our approach by presenting simulated control scenarios.
Volume
19
Issue
2
Language
English
OCDE Knowledge area
Economía
Matemáticas aplicadas
Econometría
Scopus EID
2-s2.0-85184715530
PubMed ID
Source
PLoS ONE
ISSN of the container
1932-6203
Sources of information:
Directorio de Producción Científica
Universidad ESAN